On September 27, the Trump administration and congressional Republicans outlined a nine-page “Unified Framework for Fixing Our Broken Tax Code.” What effect might this proposal have on the amount you pay?
The plan appears to incorporate a conventionally Republican suite of changes: lower rates, unspecified new relief for families, and incentives to repatriate foreign earnings. At the same time, they’ve proposed to limit certain breaks and eliminate nearly all itemized deductions, including those for state and local taxes.
However, this “Framework” is just the latest of several proposals Trump has floated since the 2016 campaign. And many of these items are starting points for discussion rather than detailed policies. So we should expect the terms of the legislation to change as it moves through Congress.
Are you curious what might happen to your taxes under the new proposal? Call us for a free Tax Analysis. We’ll tell you where your opportunities
Here is the summary of changes:
- Cut brackets to three: 12-25-35%
- Double the standard deduction
- Eliminate the personal exemption
- Increase the Child Tax Credit by an unspecified amount
- Eliminate itemized deductions other than mortgage interest and charitable gifts
- Repeal Alternative Minimum Tax
- Repeal Gift & Estate Tax and Generation-Skipping Tax
- Cut top rate to 20%
- Cut top rate on pass-through income
- Cut top rate on income from S corps, partnerships, and proprietorships to 25%
- Limit deduction for net business interest paid by taxable corporations
- Allow immediate expensing for non-real estate capital assets
- Eliminate domestic production activity deduction
- Impose repatriation tax to bring back accumulated profits of foreign subsidiaries
- Move to “territorial system” (taxing companies on U.S. earnings only) to level the playing field for American companies